The Balance Between Innovation and Regulation
As the foremost advocate for blockchain technology, The Digital Chamber has consistently championed a regulatory environment that nurtures innovation while safeguarding the public interest. It’s a delicate equilibrium, particularly when new proposals surface that could significantly affect the industry. That’s why we’re getting involved to shape the dialogue around the U.S. Bureau of Information Security’s (BIS) notice of proposed rulemaking aimed at U.S. Infrastructure as a Service (IaaS) providers.
Our Concerns with the Proposed Rule
Our commitment to fostering growth within the blockchain ecosystem compels us to address the well-intentioned but potentially overreaching aspects of the current proposal. Our concerns hinge on the broad language of the rule, which may not fully account for the unique attributes of decentralized systems and the way blockchain technologies operate.
The Unintended Consequences for Decentralized Services
The proposal, as it stands, could impose significant compliance hurdles for decentralized IaaS providers. These entities, often small-scale operations without the vast resources of traditional cloud services, face the real possibility of being subject to impractical Know Your Customer (KYC) mandates. Moreover, the expansive definition of an IaaS product in the proposal does not seem to encapsulate the specialized nature of blockchain-based services, which often fall outside the realm of conventional cloud computing.
The Path Forward: Recommendations for Consideration
We have provided several recommendations to the BIS, advocating for the explicit exclusion of blockchain-based IaaS and decentralized, permissionless products that do not offer traditional cloud-computing solutions from the proposed rule’s scope. We also urge a re-examination of traditional approaches to compliance such as KYC protocols, ensuring they adapt to the decentralized and digital nature of blockchain technology.
Embracing Technological Solutions
We suggest a collaborative effort with DLT experts to develop identity verification systems that respect privacy and align with decentralized principles. Emerging technologies, such as zero-knowledge proofs and secure multi-party computation, present promising avenues for compliance that do not compromise individual privacy.
Our Call for Collaborative Engagement
The Digital Chamber believes in proactive engagement with regulators like BIS. By working together, we can integrate technological solutions that ensure safety and compliance without undermining the values of privacy and decentralization that are central to the blockchain community.
Read Our Full Comment Letter
We invite you to read our comment letter to grasp the comprehensive implications of the BIS’s proposed rulemaking. It is our hope that by contributing our perspective, we can assist the BIS in recognizing the importance of preserving the innovative spirit that drives blockchain technology forward.
Join the Conversation
We stand ready to serve as a resource and look forward to continuing the conversation with BIS and the blockchain community. Your thoughts and participation are crucial in this journey towards a regulatory framework that fosters growth, ensures security, and maintains the freedom fundamental to our digital future.